Facebook Surpasses $30, Ahead of Q4 Earnings

Shares of Facebook Inc. breached the $30 mark on Wednesday, the first time in six months.

The milestone represents a welcome reversal for the social networking company, which struggled last year to convince investors that it could justify a high valuation. In May, Facebook went public at $38 a share in a much-ballyhooed IPO, but its stock price soon got clobbered in the following weeks. The shares hit a low of $17.55 on Sept. 4.

On Wednesday, shares of Facebook rose more than 4% to $30.39. The stock climb comes a day after Facebook sent out invitations to the press for an event next week at its Menlo Park, Calif., campus. The invites simply says, “Come and see what we’re building.”

Facebook declined to comment.

Facebook’s “story is no different,” said Michael Pachter, a Wedbush Securities analyst. “But we see more evidence that all of the things we thought they could do, they are beginning to do.”

Facebook has been on a rollercoaster ride since its May IPO. Prior to going public, the company explicitly warned investors about the outlook for its mobile business in a regulatory filing and separately tried to temper the expectations of equity analysts. Around that time, General Motors revealed it was pulling its advertising dollars from Facebook. The negative signals, compounded by an aggressively sized offering and technical glitches on the day of the IPO, weighed on Facebook’s stock in the ensuing months and the company’s shares hit a nadir of less than $18 in September.

Facebook has since moved aggressively to build its mobile business, with the rollout of new ad products and standalone applications, such as “Poke,” a clone of Snapchat, a popular mobile messenger service.

It has also recently pushed into new verticals, such as e-commerce, through the introduction of its Gifts feature, which encourages members to buy presents for their friends’ special occasions, such as birthdays and engagements. Facebook has started to fold several retail partners into the Gifts service, including Starbucks and online retailer, Fab.

Facebook, which prides itself on its “hacker” culture, is known for constantly introducing and tweaking new features, making it difficult to discern which products will stick and which will be folded. Still, many analysts see the recent experiments as encouraging and a strong signal that Facebook is focused on ferreting out new business opportunities, particularly on mobile.

“Facebook had to go from 0 to 60 in mobile,” said Colin Sebastian, a Robert W. Baird analyst. “They are shifting from a desktop company to a more mobile one. That requires taking more risks.”

Facebook reports its fourth quarter earnings at the end of this month.

Still, several analysts on Wednesday said Facebook continues to face challenges, including questions on how it will improve how it makes money off international users, especially as user growth in developed markets continues to slow.

It’s also unclear if Facebook’s standalone mobile applications, like “Poke, will succeed or cede more ground to startups. Instagram, the photo-sharing application it acquired for nearly a billion dollars last year, recently sparked user outrage after changes were made to Instagram’s terms of service. The company was forced to backtrack on some of those changes, but not before many users abandoned the service for rivals, such as Flickr.

“It is still in the early innings,” Mr. Sebastian said. “Not everything Facebook does is going to be successful.”